DUNDEE 90CENT TARGET!!!!!! Rodinia Lithium set to receive "re-rating" soon, says Dundee Securities
Fri 2:29 pm by Deborah Sterescu
Rodinia Lithium (CVE:RM) received a reiterated "buy" rating from Dundee Securities Friday with a target price of C
.90 after the lithium explorer announced yesterday that it received conditional approval from the Bureau of Land Management (BLM) for drilling on its Clayton Valley project in Nevada.
The conditional approval of the plan of operations permits additional drilling at the Clayton Valley project, which is strategically located next to the Silver Peak operation that is owned by Chemetall Foote, and has been a lithium-brine producer since the 1960s.
Rodinia’s drill program will target the southern trench that is believed to be an extension of the productive Silver Peak aquifers further north, where the company has had previous drilling success, it said.
The goal of the drill campaign is to produce the first 43-101 compliant lithium-brine resource for a North America asset.
Dundee's analyst Mansur Khan noted that Rodinia is also working on completing an Environment Assessment (EA), which may be required as part of a 30-day public comment period for the plan of operations.
Drilling can begin as early as in a month’s time, "but would ideally start in the summer time when conditions are better", the Dundee report noted. Drilling is to pick up from where it left off back in 2010 - moving south along the previously identified trend.
"Rodinia put out great news this morning with the BLM conditionally approving the Plan of Operations for Rodinia's Clayton Valley project in Nevada immediately adjacent to Chemetall's operation," Khan said.
"This approval was in the waiting for nearly two years and in our view, it is a major step forward in unlocking value from this project.
"In addition to the development of RM's flagship Diablillos project in Argentina, this Clayton Valley project now coming alive can potentially provide further exploration upside and positive news flow to Rodinia's story in the near term."
Indeed, the Dundee report also noted that Rodinia's projects in different jurisdictions reduces risk.
The first in line is the flagship Diablillos project in Argentina, which is located in the Salta province adjacent to major producer FMC's Salar de Hombre Muerto operation.
Dundee's report said: "The recently filed PEA reported very impressive economics; a FS [feasibility sudy] is expected to be completed by year end. Drilling of the first production well is underway, long term pump tests are to follow, and the company recently started a phased pilot level construction that can help expedite the development process to full production of 15,000tpa LCE in 2015."
Earlier this month, Rodinia Lithium said that it has started the construction and operation of a pilot production facility at its Salar de Diablillos project.
The facility is to produce battery-grade lithium carbonate on site, including production of by-products potash and boric acid, giving a glimpse of how a potential final production facility would operate.
In November 2011, the company's preliminary economic assessment for Diablillos indicated a potentially low cost operation with a net present value as high as US$964 million, and a mine life of greater than 20 years.
The Clayton Valley asset is the next in line, with the BLM approval set to "garner renewed interest from investors".
Controlling over 70,000 acres in the only known lithium-bearing brine deposit in North America, neighboring a long-established operation run by another major producer, and with power and infrastructure already in place, Dundee said it "envision[s] this news could add a whole list of catalysts to unlock value in this prospective property".
The capital markets firm said that Rodinia trades at a "deep discount" to its brine-based peers, "who are perhaps 1-2 years further down the development path".
Rodinia, with $4 million of cash, is expected to require funding for its near-term development and drilling plans, rendering some financing risk.
"However, we are of the view that such a deep discount is not warranted given the underlying progress being made, the upcoming catalysts and with a strong management at the company's helm," Dundee concluded.
"With Chinese battery material manufacturer Shanshan as a strategic partner, a pending FS on its flagship Diablillos project located in a jurisdiction with a history of lithium-brine mining and fewer permitting issues than faced by its peers in a neighboring province, and its Clayton Valley project now coming alive with today's BLM announcement, we believe the market will soon re-rate this stock